A small argument for liberty

In the Australian state of New South Wales, which includes the city of Sydney, the number of pub licences is finite, and by all reasonable measures too few. Pub licences in Sydney trade like New York taxi plates, and sell for hundreds of thousands of Australian dollars. Because existing licences are so valuable, pub owners are extremely hostile to any competition that would reduce the value of their licences. Therefore, there is very strong resistance to increasing the number of licences and hence the number of pubs. Also, restaurant liquor licences are highly restrictive. Diners may not buy alcoholic drinks in a restaurant unless they “intend to dine”, and they may not drink alcoholic drinks in a restaurant while standing up. If these restrictions were relaxed, there would be little difference between restaurants and bars and pub licences would lose some of their value. The pub lobby therefore opposes any change, and a succession of state governments have given in and have not changed the law.

Of course, if a pub licence costs several hundred thousand dollars, it is necessary for pubs to make a decent return on this investment, and therefore in Sydney there are essentially no small pubs. Pubs are mostly large and fairly soulless. The sort of small, cosy pubs with character that are everywhere in England are mostly absent. And this is a shame.

As it happens, I was today in Canberra, Australia’s capital city. Although the city is entirely surrounded by the state of New South Wales, it has a similar status to Washington D.C. The city sits in a jurisdiction called the Australian Capital Territory (ACT), which is not part of any state but which constitutionally speaking is entirely the responsibility of the federal government. (An ACT government does exist, with powers somewhere in between those of a city government and a state government, but it does so entirely at the pleasure of the federal government).

One thankful consequence of this is that the liquor and pub licensing laws of the state of New South Wales do not apply in Canberra. In Canberra it is not necessary to pay hundreds of thousands of dollars for a pub licence, and small pubs are possible. As it happened, I met up with a friend. Knowing my fondness for good beer, the friend took me to a nice cozy little brew pub, that served seven or eight different beers brewed on the premises. There was a hefe-weizenbier (not as good as what I would drink in Germany, but still quite good), a Kölsch style lager, three or four English style cask conditioned ales, and more. It was possible to brew all these beers and sell them on cozy little premises that catered to a clientele that liked that sort of thing. It was nice.

But in Sydney such a thing cannot easily exist. And it is all to protect rent seeking vested interests. Sydney has a huge number of restaurants serving excellent food of every kind imaginable, and is one of the finest cities in the world in which to eat. But as a place to go out for a drink, it leaves something to be desired. Canberra does not have this problem. (To be fair, Melbourne does not have this problem either). And this is entirely due to the difference in regulation.

November 7th, 2003 |

6 comments to A small argument for liberty

One solution floated here in NY for taxis is to issue each existing holder of a hack license a second one, gratis…kind of like a 2:1 stock split. They can sell the second one, or use it themselves. With only existing holders getting the freebies, their own wealth is not impaired, but more choices are created for consumers. Alas, this notion remains on the shelf.

As good an example as to why the State, once expanded, is not likely to contract, as flesh and blood people have something at stake to protect post regulation. But of course there is still stimulus to change the status quo by other interest groups, resulting in more expansion and/or the addition of serpintine regulation (like toting up who has and who has not received their additional license, and who they sold it to, so that the buyer doesn’t receive one as well).

California used to have what was called “The Rubber Sandwich Law” where, since liquor could only be sold in a food service facility. When the bar opened, the bartender would make a plain bologna sandwich on white bread, and put it on a plate on the back bar. If you ordered food, you got the rubber sandwich. We git rid of that law about the same time we got rid of the law closing bars on election day when, as we all know, one needs a drink more than on any other day.

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